BUSINESS
Mobile TV
A fuzzy picture
Jan 5th 2006
From The Economist print edition
Mobile TV is coming??but how the market will develop is still unclear
??THIS is a really exciting time??a new era is starting,? says Peter Bazalgette, the chief creative officer of Endemol, the television company behind ??Big Brother? and other popular shows. He is referring to the upsurge of interest in mobile television, a nascent industry at the intersection of telecoms and media which offers new opportunities to device-makers, content producers and mobile-network operators. And he is far from alone in his enthusiasm.
Already, many mobile operators offer a selection of television channels or individual shows, which are ??streamed? across their third-generation (3G) networks. In South Korea, television is also sent to mobile phones via satellite and terrestrial broadcast networks, which is far more efficient than sending video across mobile networks; similar broadcasts will begin in Japan in April. In Europe, the Italian arm of 3, a mobile operator, recently acquired Canale 7, a television channel, with a view to launching mobile-TV broadcasts in Italy in the second half of 2006. Similar mobile-TV networks will also be built in Finland and America, and are being tested in many other countries.
Meanwhile, Apple Computer, which launched a video-capable version of its iPod portable music-player in October, is striking deals with television networks to expand the range of shows that can be purchased for viewing on the device, including ??Lost?, ??Desperate Housewives? and ??Law & Order?. TiVo, maker of the pioneering personal video recorder (PVR), says it plans to enable subscribers to download recorded shows on to iPods and other portable devices for viewing on the move. And mobile TV was one of the big trends at the world's largest technology fair, the Consumer Electronics Show, which took place in Las Vegas this week.
Despite all this activity, however, the prospects for mobile TV are unclear. For a start, nobody really knows if consumers will pay for it, though surveys suggest they like the idea. Informa, a consultancy, says there will be 125m mobile-TV users by 2010. But many other mobile technologies inspired high hopes and then failed to live up to expectations. And even if people do want TV on the move, there is further uncertainty in three areas: technology, business models and the content itself.
Tuning in
At the moment, mobile TV is mostly streamed over 3G networks. But sending an individual data stream to each viewer is inefficient and will be unsustainable in the long run if mobile TV takes off. So the general consensus is that 3G streaming is a prelude to the construction of dedicated mobile-TV broadcast networks, which transmit digital TV signals on entirely different frequencies to those used for voice and data. There are three main standards: DVB-H, favoured in Europe; DMB, which has been adopted in South Korea and Japan; and MediaFLO, which is being rolled out in America. Watching TV using any of these technologies requires a TV-capable handset, of course. Although several new models were unveiled in Las Vegas this week, no such handsets are yet available in Europe or America, and few in Asia.
In contrast, watching downloaded TV programmes on an iPod or other portable video player is already possible today. And unlike a programme streamed over 3G or broadcast via a dedicated mobile-TV network, shows stored on an iPod can be watched on an underground train or in regions with patchy network coverage. That suggests that some shows (such as drama) better suit the download model, while others (such as live news, sports or reality shows) are better suited to real-time transmission, notes Michelle de Lussanet of Forrester, a consultancy. The two approaches will probably co-exist. Future iPods may be able to receive real-time broadcasts, while mobile handsets will be able to store broadcast content or download it from PCs or PVRs for later viewing.
Just as there are several competing mobile-TV technologies, there are also many possible business models. Mobile operators might choose to build their own mobile-TV broadcast networks; or they could form a consortium and build a shared network; or existing broadcasters could build such networks. Some channels will be given away for free, while others are for paying subscribers only. The outcome will vary from country to country, depending on the regulatory environment and the availability of spectrum. In Italy, 3 bought Canale 7 to get its hands on its spectrum and its broadcaster's licence; in Britain, Finland and America, the scarcity of spectrum makes shared networks most likely.
The big question is whether the broadcasters and mobile operators can agree how to divide the spoils, assuming there are any. Broadcasters own the content, but mobile operators generally control the handsets, and they do not always see eye to eye. In South Korea, a consortium of broadcasters launched a free-to-air DMB network last month, but the country's mobile operators were reluctant to provide their users with handsets able to receive the broadcasts, since they were unwilling to undermine the prospects for their own subscription-based mobile-TV services.
Then there is the question of who will fund the production of mobile-TV content: broadcasters, operators or advertisers? Again, the answer is probably ??all of the above?. Endemol's new mobile-TV division is talking to both operators and broadcasters about the commissioning of new shows, says Mr Bazalgette. But operators are newcomers to the world of television. Existing broadcasters have the advantage that they can use traditional TV to promote mobile content. But for operators, building mobile-only TV franchises will not be easy. Another problem is that mobile operators have yet to work out how to deal with advertisers. When Anheuser-Busch, a big drinks company, approached British operators about placing mobile-TV advertising, says Ms de Lussanet, it was passed back and forth between their technical and marketing departments.
Assuming the technology and the business models can be sorted out, there is still the tricky matter of content. At the moment most mobile-TV content is simply re-broadcasts of traditional channels, though in some cases programmes have been re-edited for mobile transmission. But the medium opens up many new possibilities, such as live streaming of raw material (as Endemol has successfully done with ??Big Brother?), mobile-only ??behind the scenes? content that complements traditional broadcasts, and entirely new, short-form programmes designed specifically for mobile transmission.
Since mobile phones are two-way, interactive devices, other possibilities include quiz shows in which the viewers are also the contestants, and programmes based on ??viewer-generated? content. 3, for example, has a popular service called ??See Me TV? which allows subscribers to upload short video clips. The author of the clip receives a small payment (1p in Britain, for example) each time the clip is viewed.
The potential for mobile TV is vast, in short??but so is the degree of uncertainty over how it should actually be put into practice. Most observers do not expect widespread adoption of mobile TV, if it comes at all, until 2008 at the earliest, since building the required ecosystem of technology, partnerships and content will take some time. Stay tuned.
